As China and Russia champion an expanded BRICS, India may have to pick a side

Expanding the BRICS grouping would help build an alternative to the Western alliance and enable countries in the Global South to avoid economic shocks from sanctions
However, China dominating this new world order would not suit India, which is already under pressure from the West over its oil purchases from Russia

Akhil Ramesh

Published: 3:30am, 7 Jul 2022

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In June, China hosted the BRICS summit, which brought together the leaders of Brazil, Russia, India, China and South Africa, just a few days before the G7 meeting. This iteration of the BRICS summit was noteworthy in multiple ways.

First, it was held against the backdrop of the Ukraine conflict. Second, Russia recently defaulted on its sovereign debt commitments. Third, India is beginning to feel the pinch of striking a balance in an increasingly bipolar world order.

China had invited several countries to attend the BRICS foreign ministers’ meeting in May, and both China and Russia have voiced support for expanding the group. Developing countries have responded positively. In June, Argentina’s president expressed an interest in joining the grouping, while Iran has applied to join.

It may not just be Taiwan watching developments in Ukraine closely. Several countries in the Global South are taking note of the economic blowback from the conflict as Russia experiences first-hand the impact of sanctions.

For China, the conflict underlines the need to shield itself from such a scenario and to explore options beyond its dual circulation strategy. Creating an alternative to the Western bloc, comprising countries that have had disputes with the West, is one such strategy. Argentina’s Falkland Islands dispute with the UK and Iran’s tension with the US are two examples.

Beijing has been vying for the mantel of leadership of the Global South. China’s “century of humiliation” and its critique of Western nations’ human rights abuses, and Russia’s support of American whistle-blowers, make the two countries strong candidates to challenge the hegemony of the US-led Western alliance.

Chinese President Xi Jinping and Russian President Vladimir Putin in Moscow on June 5, 2019. Photo: Kremlin/dpa

Russia or China are unlikely to challenge American hegemony through military power, given that the US has over 750 military bases around the globe while Beijing and Moscow together can count only a few bases in Asia, Europe and Africa. However, on trade and economics, Beijing can flex its muscles.

Both countries have emphasised the need to diversify their central banks’ reserve currency holdings away from the US dollar. Russian President Vladimir Putin has spoken of the need to hold commodities instead of sovereign currencies. China is systematically working towards internationalising the renminbi.

Western economists discount the possibility of the renminbi replacing the US dollar, arguing that China’s monetary authorities lack autonomy and that the currency is not fully floated like other major reserve currencies.

These are valid points. Also, to truly internationalise its currency, China would have to overcome the “Triffin dilemma”, whereby a country whose currency is an international reserve currency ends up with a persistent current account deficit, but failure to sell enough of the currency would destabilise the world economy.

Nevertheless, China is boosting the use of the renminbi in trade with other countries, particularly through its Belt and Road Initiative, and increasing its currency swaps with monetary authorities around the world. Moreover, Chinese goods and services can be found in every corner of the world.

Given that the fastest-growing economies are in the Global South, BRICS expansion could help prevent economic shocks from sanctions imposed by the West. Countries such as Iran, Venezuela and Argentina could remain in the global trade architecture or the closed loop that Russia and China seek to build through an expanded BRICS.

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However, not all nations in the Global South are completely behind the plan to replace the US dollar as the global reserve currency or to create an alternative world order. For one, India would not want a world dominated by its rival China.

India prefers a multipolar world, but as international relations scholar C. Raja Mohan put it, “if the logic of a multipolar world leads to a ‘unipolar Asia’ led by China, India might find itself in the fire rather than the frying pan”.

An India led by Prime Minister Narendra Modi is different from the India led by Indira Gandhi, which was willing to side with the Soviets against the US in the 1970s. Modi’s India wants to have its cake and eat it too – a seat at the high table on its own merit without any sacrifice of its non-alignment.

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With the BRICS grouping upping the ante and the West keeping the pressure on India about its oil purchases from Russia, India, in trying to play cat on the wall, might find itself on a barbed-wire fence. With every move inflicting pain, it may have to jump off.

But onto which side will it leap? Recently, China’s Foreign Minister Wang Yi called on India’s ambassador to China and spoke of the need to put the border issue in an “appropriate place” in bilateral relations.

Pradeep Kumar Rawat (left), India’s new ambassador to China, meets Chinese Foreign Minister Wang Yi in Beijing, on June 22. Photo: Xinhua

To further complicate India’s dilemma, the G7 launched another initiative, the Partnership for Global Infrastructure and Investment, without elaborating on the status of its earlier platform, Build Back Better World. Will India sign on?

The rise of populism in the West and the diminishing appetite for involvement in world affairs, coupled with the US’ withdrawal from the global trade architecture, have created a vacuum for China to fill. The groupings with various acronyms, which the US has come up with, will have to be institutionalised and their shelf life not limited to the Biden administration. Time will tell if the US is serious about refocusing on Asia.

Until then, China and Russia will capitalise on the US withdrawal and nations such as India will have to endure the pains that come with walking a tightrope or make the ultimate sacrifice of picking a side.

Akhil Ramesh is a fellow at the Pacific Forum